Manning and Harris Call for Downsizing of Government; Reduced Taxes and Spending Key to Economic Freedom

As Ottawa readies its economic update for release
this week, now is the ideal time to move forward on reducing
spending, cutting taxes and eliminating provincial trade
barriers, Preston Manning and Mike Harris say in a new policy
paper released today,
Building Prosperity in a Canada Strong and Free.

"The government plays too large a role in the Canadian economy
and that's hindering our growth. We call on Canadian governments
to cut government's share of the economy to 33 per cent from its
current 39 per cent over the next five years. That alone will
save Canadian taxpayers almost $400 billion over five years and
spur increased prosperity," Manning said.

In addition to the impact of government spending, Manning and
Harris, both senior fellows at The Fraser Institute, show in this
fourth volume of the
Canada Strong and Free
series of policy papers how excessive taxation is reducing
Canadians' income and transferring economic decision making into
the hands of bureaucrats and politicians.

"Canadians don't want government bureaucrats and politicians
making economic decisions for them. Let's give the people of this
great country more choice and more freedom to make their own
decisions. Studies around the world clearly show that families
and individuals are better at looking after themselves rather
than relying on government," Harris added.

The paper examines how interprovincial trade barriers and
excessive regulation of business are creating a drag on the
economy and need to be removed. Manning and Harris call for a
restoration of balance between the public and private sectors'
consumption of national wealth and they recommend a series of
proposals to help build Canadian prosperity and economic freedom:

Reduce the size of the government by cutting spending

Canada's public sector is too large in proportion to the
wealth-producing private sector and currently consumes 39 per
cent of the nation's economy. Manning and Harris point out that
research shows the optimal size of government should be one that
consumes 20 to 35 per cent of a nation's economy. They suggest
Canada's governments should reduce spending until government's
share of the economy falls to 33 per cent.

Reduce taxation

Manning and Harris propose a measured program of expenditure
reductions that allow fiscally responsible tax reform designed to
stimulate economic growth and leave more wealth in the hands of
Canadians. Included in their recommendations are reductions in
corporate income tax rates, elimination of corporate capital
taxes, a move to a single-rate personal income tax, elimination
of capital gains taxes, and removal of limits on RRSP and RPP
contributions.

Eliminate excessive regulation

Over-regulation imposes heavy costs on consumers and businesses,
Manning and Harris note. They say the federal government should
follow up on the Smart Regulation Initiative launched in 2005 to
harmonize government regulations and eliminate overlap and
outdated regulations. They also suggest that any group proposing
new regulation be required to provide a detailed cost/benefit
analysis.

Eliminate interprovincial trade barriers

Barriers to free trade between provinces cost the Canadian
economy billions of dollars per year, Manning and Harris say. But
provinces defend these barriers, essentially to protect powerful
special interests at the expense of all Canadians, including
their own citizens. Manning and Harris propose that all provinces
and territories need to accept the principal of an open domestic
market and they argue that the federal government needs to use
its power to strike down interprovincial trade barriers.

"Our goal is a simple one: to make Canada the very best place on
the planet to live. This goal is not overly ambitious. As
Canadians we have already accomplished much. Yet the talents of
our people and the bounty of our land equip us to do more, to
create nothing less than the world's best governed and most
prosperous nation, enjoying the highest quality of life," Manning
and Harris said.